Invest in WNA Nuclear Energy Index with PowerShares' New ETF
Source: Peter Charles, Seeking Alpha (3/31/08)
The breakdown of the index is as follows; 25% power generation, 25% technology/equipment and services, 20% nuclear fuel, 15% reactor vendors, and 15% construction. The WNA Nuclear Energy Index is comprised of 64 companies. I believe the index levered to the real nuclear economy due in part to the efforts made by the selection committee which is comprised of seasoned industry executives.
I am not a fan of the Market Vectors Nuclear Energy ETF (NLR). It mirrors the DAXglobal Nuclear index, and it was the only nuclear ETF available. The index sector breakdown is as follows; 42.2% uranium mining, 25.6% plant infrastructure, 24.0% nuclear power generation, 4.6% uranium storage, 2.3% uranium enrichment, and 1.3% nuclear fuel transport. This index and the associated ETF are missing out on the lion's share of nuclear power related revenues. And simply put, there's just too much uranium mining. Uranium accounts for less than 10% of a nuclear operation yet in this "nuclear" index it accounts for 42% of the portfolio. For the next decades, there's a great opportunity in companies that are tied to the actual deployment of nuclear reactors.